BABY STEPS LEAD TO AVALANCHES

“Most people have attained their great success just one step beyond their greatest failure.” ~ Napoleon Hill

Real Estate Bird Dogging-A Great Way To Build Investing Confidence

One of the problems faced by many newbies (new investors) in the real estate business is lack of confidence. Confidence cannot be built without doing the activity that you are trying to build confidence in. This presents a problem with most people because real estate is not something that you can just practice, you cannot practice buying a house, or practice selling it. You could pretend to buy houses I guess, or pretend to sell houses, but pretending is for kids. This is where real estate bird-dogging comes into play. It gives you a reason to practice, you get paid. Now if money won’t make you practice then nothing will.

Instead of not getting paid for all those hours spent learning the market, you could be making thousands. I cannot think of a better way to learn real estate than getting out and looking for good deals, then finding good deals and showing them to buyers, who pay you for your services. Then after the buyers close you can follow the progress of the home and see if you made a good decision or not. The best part is that during your practice, even if you made a not so great decision you still get paid, and you do not lose a penny.

I started out my investment career as a Realtor. I built my confidence through selling investment properties to other people and watching them make money. After selling 9 homes to other investors and seeing them profit tremendously, I knew it was time for me to start making myself some money.

Real Estate Investing Tip - Three Things That You Need To Know To Succeed

Three things that you need to know to succeed

Are you new to the world of real estate investing? There are many key points involved in real estate investment that can help you make your deals more profitable. Real estate investing is all about facing the challenges and pitfalls you may encounter along the ways. If you are new to this venture there is definitely a lot to learn. Once you have groomed yourself and have gained some experience, you can become the master of the art and can surely make more profits.

Here are some useful Real estate investing tips

1. Selecting a right location:

Selecting a right location is very important to achieve success in your real estate investment deals. The better the location, the better the chances that the value of your property will increase over time. It would be advisable to select a location where the demand for the property is high and the property prices are always rising. You need to consider many prospects before selecting a location for your real estate. One of the key points you have to consider is about the major developments that are planned for the area in the future.

2. Pay Market Value:

Never pay more for a property than what it is worth. It is very important to access the market value of a property before you actually consider buying it. Buying a property in a good location can be a good option as you can expect the value to double every 7 to 10 years. You can also ask an agent on information on price growth in a suburb.

3. Attracting tenants:

One of the most important point you need to consider while buying a property is whether it will attract tenants or not. It would be advisable to buy a property in an attractive location where other people wants to live as tenants. You need to put yourself in the tenant’s position as to what they will consider buying from you. You need to work out on certain points to attract tenants this includes good access to transportation, education facilities, health, community facilities and adequate parking.

Copyright ? 2006 Joel Teo. All rights reserved.

About the Author

Joel Teo writes on arizona estate goodyear investment real . Learn more about Property Investment by signing up for his free Property Investment Ezine

Beginning Real Estate Investing? Increase Your Profits With The Magic Of Leverage

When you invest your money in things like RRSP’s or stocks and bonds your leverage is zero because you have used your own money and none of other people’s money. When you buy a home with a mortgage you have used leverage, which is common in most all real estate investments. You own the down payment of coarse but the lending institution owns the rest.

You bought a house for $100,000 with a $5,000 down payment. The OPM you used, or leverage is 95% and your down payment was 5%. Here lies one of the most important principles for someone just beginning real estate investing or even if you’re well into it:

The More Leverage You Use, The Greater Your Profit Potential.

Now the house you bought for $100,000 has increased in value up to $105,000 in just under a year, not bad. It only appreciated 5% but the good news is the return on YOUR investment is 100% because you invested $5,000, it went up $5,000 so you doubled your money earning a full 100% on your investment. Let’s say that over the next 10 years your property goes up to $25,000 in value, this will give you a 500% return on your money. Leverage is computed by dividing the increase in value by the cash down payment (25 divided by 5 is 5).

If you had $100,000 you could buy one property outright with your cash or you could make a lot of money with leverage and buy 20 properties by putting $5,000 down on each one. So, now instead of having a $100,000 property you’ve got $2,000,000 worth of property. Now let’s say the properties all appreciated by 5% during the first year your profits would be $100,000. If you had bought just the one property instead you would have only made $5,000 in profits.

As you can see, the less of your own money you use, the greater your profit potential and if you were able to buy a property with none of your own money, then the return on your investment is infinite. You can’t divide by a zero down payment. To figure out the return on investment from appreciation, taxes, or principle reduction, always divide by your cash down payment.

We have seen here how leverage can increase you chance for profits, but if you are financially unprepared it can greatly increase your potential risk. Higher earning strategies always have a higher risk potential that go along with them. The super save route of investing the entire $100,000 into one property is totally safe but will give you a much lower ROI. Those 20 properties you bought all have a mortgage on them which you are responsible for so if a few aren’t rented or the rents don’t get paid the money comes out of your pocket. Does this additional risk warrant the use of leveraging? Yes it does but you have to plan ahead and be prepared to handle any possible negative cash flow problems should they arise.

“How to handle negative cash flow” will be discussed in an upcoming article.

Real Estate Investing - How To Get Started

If you are new to the world of Real Estate Investing, don’t feel bad. Maybe you have yet to do your first deal. We have all been there. I’ve met a lot of experienced investors, and not one of them came out of the womb with any deals under their belts- even though some of them would like you to believe they did!

We all have to start somewhere. Everybody has to do their first deal- their icebreaker. There are only two kinds of investors- those who have, and those who haven’t- done a deal that is. If you’re one of those who haven’t, this article is for you. I’m going to answer your most burning question- “How do I get started?”

How do I know this is your most burning question? Because not too long ago it was mine. I remember looking at investors who had only done one or two deals and thinking, “Those people are good! How’d they do that?” Now I know, and after reading this article, so will you.

There really are only five simple steps to getting started.

The Five Steps

Step One- Relax.

Step Two- Build your knowledge base.

Step Three- Open your eyes.

Step Four- Make offers.

Step five- Finish what you start.

The end.

Just kidding. I know all I’ve done is excite your curiosity, and if I leave you now you’ll hunt me down and kill me- I wouldn’t blame you. So I’ll explain the five steps.

Step One- Relax. Believe it or not, for me this was the most important step. Most people working toward their first deal are way too intense. I was. For weeks and months it was all I could think about, morning, noon, and night. I was tense and irritable. My family suffered. I suffered. My job suffered. And still no deal.

So, I consciously decided to relax. I didn’t stop working toward my goal, I just stopped obsessing and worrying about it all the time. I watched the things I was telling myself (my self-talk). I reminded myself that, since I was doing all the right things consistently, my first deal was right around the corner. I told myself the truth- “It’s only a matter of time!” I forced myself to relax, so I could focus on the really important things- my faith, my family, and my fitness (body, mind, spirit).

When those things are in alignment, success can occur naturally and easily- almost without effort. Try it yourself- for the next three days consciously relax and let go of the tension you feel about getting that first deal!

Step Two- Build Your Knowledge Base. Many people get this one out of order. They try to cram all sorts of knowledge into their head before they are relaxed enough to absorb it. Your brain doesn’t work like a machine. Try to stuff it full when you are tense and feeling pressured to ‘get a deal’, and you will recall next to nothing. Relax first, and your brain will work the way God designed it to- smoothly and efficiently. You’ll be amazed at what you will learn, and how fast you’ll learn it!

Read anything and everything. Buy books and courses, listen to tapes, attend conferences and seminars. Visit all the investing websites and bookmark the ones you like. Read the forum posts, the free articles, and the success stories. Especially DealFiles!

Don’t limit yourself to learning just one kind of investing. If you classify yourself as merely a ‘flipper’ or ‘rehabber’ you may miss out on a tremendous opportunity because you’re not looking for it. Visit my Resource Page for advice on the best educational materials out there.

Before I flipped my first house, I read books and courses on foreclosures, subject-to, lease options, and a hundred other investing strategies. Because I taught myself to relax, I never felt overwhelmed with too much material. When the time came for my first deal, I used techniques from many different sources. I didn’t have to think too much about it- the information was there, waiting for me to access it.

A word of caution- stay relaxed! Don’t treat this like a job. You should be enjoying this. If not, you may want to rethink why you’re doing it in the first place.

Step Three- Open your eyes. After you have consciously relaxed, and while you are building your knowledge base, start to look around you. You are looking for opportunity, and you will be amazed at where and when you see it. Opportunity can take several unexpected forms, and show up when you aren’t looking for it. In fact, that’s usually the way opportunity presents itself. People you meet, things that happen around you, any of a hundred things that occur as you move through your days.

For instance, a conversation you overhear may present an opportunity you would never know about otherwise. Context is crucial. Now that you are relaxed and learning, you are free to interpret things you see and hear in a fresh way. You start looking at people, places, and events through the eyes of a Real Estate Investor, because that’s the way you are training your mind to think. This is very good.

It’s also called ’serendipity’, a fifty-cent word meaning “the phenomenon of finding valuable or agreeable things not sought for.”

I found my best resource- my Realtor- this way. He was introduced to me by a friend. I said, “You’re a Realtor? Do you handle any foreclosures?”

He said, “I work for the largest foreclosure broker in the area.”

“Oh, really?!” My eyes were open.

Finally, don’t expect miracles in a day, a week, a month.

Watch. Listen. Think. Keep your eyes open.

One day soon, the deal will be there.

Step Four- Make offers. I’m not kidding here. Some people expect to get their first deal without ever making any offers. Usually, their fear is holding them back. Click this link to read my article on Four Ways To Eliminate Fear. Making no offers leaves you with nothing but wishing and hoping, bad overall strategies for success in anything.

Follow the three steps above and you WILL make offers. There’s a neat dynamic at work here. Follow the logic. You relax. You gain knowledge. Knowledge builds confidence. You open your eyes. You see an opportunity. You make an offer. Making the offer builds more confidence. You make more offers. One is accepted. You get scared. You go get more knowledge. You gain more confidence. You close your first deal. Confidence soars. Get the picture?

No offers - no deals. Simple, huh? Don’t get caught up in trying to know everything before you make an offer. You never will. Put in the time and effort. Learn well. Make offers. Enough said.

Step Five- Finish what you start. This one is easy for some of us, hard for others. If you are one of those people who get cold feet, prepare for it in advance. Decide ahead of time you will finish what you start and close on every deal you make an offer on. There are a lot of roadblocks in Real Estate Investing, any one of which could bring your deal to a screeching halt if you let it. In many cases, you are the only one who has what it takes to bring your deal to the closing table.

Determine ahead of time that, no matter what, the deal will close. Often it feels like you must put forth superhuman effort. Not true- merely human effort will work. Your human effort. You may not know it yet, but you have what it takes. Push through to the end and finish what you start.

That’s it then. Five simple, little steps that anyone can take. The only difference this time is, you are the one taking them. So much the better. After all- it’s your turn, isn’t it?

Now, go make more offers!

The Secret For Successful Real Estate Investing In California

It would seem to most people that there would be few opportunities for California real estate investing.

The state has one of the highest costs of living of all the states in the country. While this increase in cost of living keeps many Americans from moving out West, there are still some people who make the state their permanent residence.

There is constantly an influx of people moving into the state of California creating a constant demand for real estate. This demand is what keeps California real estate investing an opportunity for real estate investors.

For success in California real estate investing, investors much keep a consistent watch on the real estate trends. While there are some cities in the state that will always be popular, those cities that present the biggest opportunity for investing are always changing. Investors must pay close attention to market trends in these cities.

In California real estate investing, there are some key factors to pay attention to. One of these factors is the average days on the market for homes. This number lets investors know how long they can expect for a home to stay on the market before it is sold. If the number decreases over a period of time then the market is speeding up and it is a good time to invest.

On the other hand if the average days on hand is increasing, the market is slowing. Investors that currently hold properties should sell to keep from losing money in California real estate investing. In the case that time on the market is increasing, investors in California real estate might need to adjust the price of their homes to make sure they are selling.

Sacramento and San Diego are two key markets that are slowing. California real estate investing in either of these markets is not advised. Investors that already have these markets? real estate in their portfolio should divest the properties quickly. The exception is if the properties are rentals rather than homes for sale. However, if the homes are intended to be sold, the best time to do so is now. Waiting to sell the properties could result in losses.

Condominiums are one type of property that never seem to lose steam in California. In most cities, even those that overall home sales are declining, purchase of condos are still on the rise. The California real estate investing market is safe for condos.

Oakland, San Francisco, and Riverside are a few cities that are safe for California real estate investing. Despite the decline in many other California cities, these continue to display signs of growth. In the past, California real estate has proven to be trendy. Residents do not remain interested in one place for an extended period of time. While investors will be able to make a profit in these areas for the time being, they should not expect for these markets to be profitable for long.

For the best opportunity for success in California real estate investing, investors should study the markets for a period of time prior to making any transactions.

Take advantage of these tips and you are sure to make good profits in California

About the Author:

Claim a free e-book that will show you a system used to control $4.1million worth of real estate for just $22 - and you can follow this system to do the same. Comes with resale rights from: Free Real Estate Fortunes Ebook

Start Your Real Estate Investing Career Off Right With Smart Marketing

Sure, it would be easy for you to step into your new real estate investing career with a pocket full of cash ready to plug every marketing avenue and make money hand over fist. However, it is not this easy for everybody involved, most of the people entering the real estate investing arena looking for the big bucks are forced to start by being frugal and intelligent. Don?t spend money in the areas where it is not going to come back to you in a big way, but how is this done? Read on and take a few tips back to the bank with you!

Use the charm and hard work approach by walking door-to-door in the neighborhoods that either resemble the houses you are trying to sell or are in the same area as the houses you are trying to sell. You don?t have to talk to someone or even introduce yourself to a single soul, just put flyers on doors with your message to get your name in the right place. Sure, this may take a little bit of work and you may get a little bit of exercise, but worse things have happened! You might just find some properties that make sense for you!

Take out page ads in every paper that is used in the area where you are trying to buy or sell in your real estate investing career. Don?t put something simple like your name and a brief message, but take a bold stand that will make people want to buy from or sell to you. Tell them that you buy houses with cash or you have something to offer that can make this process much easier for you. Continue to tweak your messages in each publication until you find something that works, but when it works ? stick with it! Don?t fix the unbroken tool!

These are two inexpensive, but effective ways to get your name out and in the area where you are hoping to begin your real estate investing venture. Neither will break the bank, but neither will get you the results you want if you don?t put the required work out front in the interim. Work hard with these two strategies and you can achieve everything you hope to in this lucrative real estate investing world!

7 Steps To Make Money In Real Estate Investing

7 Steps To Make Money In Real Estate Investing Submitted By: Larry Haines

#1 Know that you can do it too! Have you ever stopped to think about who owns all the downtown buildings? Or how about all those apartment complexes you see everywhere? When you see a “For Rent” Sign on a house do you wonder how many more rental houses that guy owns. Well, the point to these questions is to say that you can be one of the millions of people that own rental real estate too? That actually comes as a surprise to some people and that is why the title above says KNOW that you can do it too! You can and you should. Let me repeat that. You can and you should. There are plenty of excuses people use to say; “well, I can’t do that” and as the saying goes - “You either can or you can’t, either way you are right!” Here’s what I want you to do. Just below write out the first few “I can’t” reasons. I’ll even get you started… What if you could turn it around so there were no excuses, no more “I can’t”? Wouldn’t that allow you to achieve your goal of financial freedom? Wouldn’t that allow you to create the result of buying properties below market value so you could make money time after time? What we intend to do is what we will ultimately get. The more clear the intention, the better chance we will do the things necessary to get it. For instance, if you say; “I want to invest in real estate”, that intention is very vague and not easily acted upon. However if you can describe what kind of real estate you want it becomes much clearer and much more likely to happen. As an example, if you say; “I want to own a rental duplex in the hospital district with each side being 3 bedrooms and 2 baths and it needs to cash flow at least $150 per side and I don’t want to pay more than $10,000 down and would love owner financing”, you are much more likely to find what you are looking for. Is it easier to believe that you can own a duplex in the hospital district or that someday you want to be rich? Your mind will help you be successful if you truly believe and articulate what you want in detail. #2 Begin with the end in mind In Stephen Covey’s book “The Seven Habits of Highly Effective People”, habit number one is “Be Proactive”. You’re being proactive just by reading this article. You’re taking action. Habit number 2 is “Begin with the end in mind”. Set a goal. Know what you want and plan how to get there. So many would be investors don’t have a road map to where they want to end up so they don’t end up anywhere. THIS IS A CRITICAL STEP!! There is a major difference between investing in real estate and being a real estate investor. By inheriting a property or buying a house that pays you $2 per month, you are an owner of an investment property. (Many people actually loose money each month because they didn’t buy right but that is another story). Technically, they are invested in real estate. But they are not real estate investors. They don’t have a plan of accumulating wealth with strategies and tactics that get them there over time. (Sorry, this is not a get rich quick opportunity…lottery tickets sold elsewhere). A plan should have realistic goals. For instance, if your desire is to retire wealthy, what do you mean by “retire wealthy”. Be very specific. I have one client that defines it as “I want my wife to be able to stay home and I don’t want to have to work. I need about $6,000 to pay my bills and I want to be able to do some traveling so I want $10,000 per month” You should have a long term goal of 10 - 15 years or more; medium term goals in the 5 - 10 year time horizon and shorter term goals in the 2 - 5 year range and immediate goals that define what you are going to do this year. Let’s take a look at a sample of this… A 52 yr. old working male with a wife that works as a teacher might start with basic goals as follows: 10 year goal retire at 62 with no reduction in lifestyle [so they need to replace $82,000/year income ($6,834 per month) which might take 10-12 free and clear houses generating cash flow in the $500 - $600/month range] 5 year goalOwn 15 housing units (could be apartment or duplex generating at least $150/unit in free cash flow ($2,250) to retire my wife to be looking for real estate full time). Own Real Estate in my self Directed IRA - grows tax deferred or even tax free if using a ROTH 2 year goalBe buying 3-4 housing units/year (one per quarter? in appreciating areas). ImmediateGet in depth education from local investors doing deals in my area. Join the local REIA - Real Estate Investors Association. Understand my financial situation - set a household budget, savings & Investment plan, income statement and balance sheet (which you will need for loans anyway). Develop a buying criteria - (what do you want to buy, where, how much, what condition, how big, etc). Find an investor friendly real estate agent (to help me find property that fits my criteria). NOTE: this is just a summary of goals while a real plan is more in depth & detailed. #3 Model success - Another way to say this is “don’t recreate the wheel”. If 8,000,000 people have already done something and hundreds of thousands are currently doing it too, DON’T TRY TO MAKE IT UP AS YOU GO! There are many real estate investors that are happy to share their experience over a cup of coffee or lunch (you buy of course). The investors I have been privileged to know are a caring, sharing group of people that want to give back and help people. That’s how I got interested. Now let’s talk specifics. If you were going to go into the hamburger business would your chance of success be better if you were starting your own burger place or buying into a big name franchise? Assuming all things were equal, you wouldn’t have to develop all the systems and training for your own business if you went the franchise way. You would have the expertise of people that have been there and made mistakes and refined their systems and processes to improve the business. You would have the help of other franchise owners in your area to let help you get started and to talk with about local business trends and situations and on and on…. The point of this is to find out what other successful people are doing and model them. Don’t recreate the wheel. If your advertising isn’t working to generate leads, find someone that has a “lead generation machine” and copy what they are doing. (Please don’t infringe on copyrights, etc). But if they have a web page driving lead traffic, you should consider it. If they are putting signs out, you should consider it. If they are doing direct mail, you might give it a try. I think you get the point. Look at every process as you find, fund, fix and flip real estate and break down the components to business processes and then put a system around the process to help you make it more efficient and more manageable. #4 Focus, Focus, Focus Lack of focus is probably the single biggest cause of new investor failure that I have seen. Every month people are buying new books and tapes from the circuit guru that flies into town for the REIA meeting or some big name putting on their own event. I’m not saying that you shouldn’t expose yourself to different techniques to buying and/or selling property but most people have a “flavor of the month” investing technique that they get excited about and don’t ever focus creating a business (being a real estate investor). Look at your resources, network of people and resources, time you have and level of difficulty and commitment to do a specific type of transaction. You should pick one that considers your time and resources and then get really good at it. #5 Take action You don’t have to be good to begin, but you have to begin to be good. This is the shortest section here. TAKE ACTION! Do something. One of my bible study teachers used to say to me after I asked so many questions was; “Larry, Just get a mitt and get into the game!” Translation for real estate investors….”Just get out there and make offers”. You can’t make money until you get a contract that is signed by the seller, right? #6 Build a team of experts You’ll want to have a team of experts on your site and should have a title attorney, CPA, property manager, appraiser, and contractor all in place. #7 Make offers! You can learn a lot and not make money. You can plan a lot and not make money. You can network with hundreds of people and not make money. You can attend meeting after meeting and conference call after conference call and not make money. Start making offers and start making some money. How many? How about 1 a day to start and then get up to 50-100 per month? Believe it or not, at some point someone will accept one of your offers and you’ll be “off to the races”. Article Tags: make, people, real Tags: Apartment Complexes, Baths, Bedrooms, Better Chance, Duplex, Financial Freedom, Intention, Invest, Investing Money, Larry Haines, Money Investing, Money Time, Nbsp, One Of The Millions, Owner Financing, People, Rental Houses, Rental Real Estate, Surprise, Time After Time Real Estate Investing - Start Learning Today! March 15, 2010 by Kenny Santos   Filed under Real Estate Investing Leave a Comment You often hear about every day people who made their money investing in the stock market, but you also hear about people who lost it all the same way. You hardly ever hear about real-estate investors who lost all there money because it doesn’t happen nearly as much. Those who invested in the key areas of real estate years ago are living the dream! The information I am providing I feel will prove helpful for any experience level of investors. Why just think about it! Do something about it! Everyone has heard there is money in real estate but no one does anything about it! This is because no one hears actually how much money there is to make by investing in real estate. Why doesnt everyone try to make there share? The reason is simply the fear inside of everyone. The majority of people feel that it is to much work and to much of a risk to take. Even with all the helpful information thats out there today. People still feel they dont know enough to take the chance of investment. Fortunately for you it will always be this way and they will always be the ones supporting you with rent money each month. What do you have to look forward to? When I decided that investing in real estate was what I wanted to do. I really didnt know what to expect The only thing I knew was that making money without dealing with my boss was what I wanted. No one just said here I want to pay you so you dont have to work, I had to come up with a plan and idea of exactly what I wanted to do. Real estate takes alot of time and patients. You will be dealing with all types of tenants good ones bad ones and everything in between. You also need to deal with stuff when it breaks, heating bills, and just fixing the place up now and then. Looking at it that way may upset you but dont forget, I dont have to follow my boss around asking what he needs done next all day for the same salary every week. Getting paid for extra work you accomplish is a breath of fresh air after working 40 hours a week trying to help your boss make money. Knowing extra work you do helps the company more then it helps you. The weather is crummy and I want to get away I leave, its that simple I dont loose money! I EARN it my rent money keeps coming each month and loans keep amortizing! The job does itself even while I lay on the beach. Knowing that I could have the freedom to go where ever I want when ever I want while earning money doing it was enough of a reason for me to love real estate. All this without a boss breathing down ur neck and throw in the other little benefits I think I found my new full time job! Cash flow It is what is says basically cash flow is the difference between your income and your expenses. Basically it’s your situation when it comes to your investment you can have a positive or a negative cash flow. If you dont know what one you want please dont read anymore! When you do obtain a little positive cash flow never use it all to pay get out of a debt in a certain area. You have alot more options by keeping a strong positive cash flow. Appreciation The two types of appreciation are economic conditions and market appreciation. Economic conditions would be out of your control like a inflation in a certain area but as you know the more popular the area the higher cost of living so you dont make as much here. Market appreciation is the more profitable of the two its a increase in value due to renovations. Buying a home touching it up and reselling for a profit would be a example of market appreciation. Appreciation is the increase in value of a property. There are two kinds of appreciation. The first is from economic conditions beyond your control, such as inflation. But you won’t gain much from this type of appreciation since the gain is offset by the higher cost of living. The second kind is market appreciation, which you can control. When you improve a property (through renovations), you force its value higher. You can purchase a piece of property in need of repairs and bring it back up to neighborhood standards or slightly higher; this will give you a property that is much higher in value. Leverage Having the ability to borrow a percentage of the value of a piece of property is what leverage is. Most of the investments im sure you have been looking at are not even a comparison to real estate when it comes to leverage. In example a couple who buy a single family home can obtain up to 95% financing. This being said allows you to purchase real estate with little or none of your own money. Like I said what other investment offers this high of a degree of leverage? Amortization When you are able to make money off of other people’s money how could you not be involved! Loans of course have interest but each payment also goes to pay off principal. Principal reduction is called amortization and this my friend can make you wealthy! Advantages When you own your own real estate and are focused of making profit with it, you have the option to deduct interest and other payments when tax time hits. Although purchasing real estate just to receive tax advantages is not what you should be aiming for. You need to purchase it because it makes sense. Benefits of purchasing Owning your own real estate business is wonderful way to escape and obtain the financial freedom you have been looking for. Remember real estate can be a hobby or it could be your new full time career the sky is the limit its what ever you make it. Ryan Dymond writes on marketing and business related issues. You can learn more by visiting my blog, Investing in Real Estate http://make-money-with-real-estate.blogspot.com Tags: Boss, Breath Of Fresh Air, Fear, Heating Bills, How Much Money, Investing In Real Estate, Investing In The Stock Market, Investing Stock, Key Areas, Living The Dream, Lost, Making Money, Money Investing, People, Real Estate Investors, Risk, Salary, Types Of Tenants Real Estate Investing : Graduated Lease February 27, 2010 by Kenny Santos   Filed under Real Estate Investing Leave a Comment New business start-ups need at least a few months to stabilize and it could take a few months before a break-even point occurs. To help such businesses as well as to counter he slack in rentals, commercial, industrial property owners have designed a lease called the graduated lease to entice new tenants. In a graduated lease, the lease amount is low for the initial couple of years and gradually increased proportionally the next three years in a typical five-year contract. This strategy worked so well that people have applied graduated lease to residential property too. Graduated Lease: How does it Work? Let us say there is a person x who leases a commercial space using a graduated lease for a period of five years. The lease includes the maintenance, taxes, insurance, utilities and janitorial services charges. His office space is 2,000 squares in a 30,000 square building. He pays $20 for each square foot so his yearly base rent will be $40,000 and for fiver years $200,000. In a graduated lease he can pay $2,500 each month for the first year {$30,000}, $3000 each month for the second year {36,000} and $ 3,500 each month for the third year {42,000} and $ 3,833.3 each month for the next two years {$91,999.9}. The low monthly rental for the first three years gives X the chance to utilize the money to develop his business and stabilize financially, hence a graduated lease will work to the advantage of the lessee. Lessees who lease commercial and industrial properties therefore prefer this kind of lease. Usually, graduated leases are offered at a flat rate for the first two years, and gradually increased as per the lease term typically five years. Lessees can negotiate to get as low an escalation cap as possible for each additional year. The lessee should make sure he understands the terms of the contract properly and that he is not paying rent for space he does not use such as a foyer or lobby to which he has no access as it is on another floor. The landlord has to ascertain that the lessee has no deceitful intent and has no record of fraud or history of delinquent rental payment. The lessee should not cause damage and or repair to the property and abscond without a trace, leaving the landlord in a lurch. It is therefore necessary for both parties to hire an experienced attorney and see to it that they are not being cheated, by carefully verifying the due-diligence and all documents presented. Graduated leases are helpful for new entrepreneurs who can use the money saved on the first few years of the lease to build and establish their business. There are firms that offer services and products to help new entrepreneurs run a successful business. Alexander Gordon is a writer for http://www.smallbusinessconsulting.com - The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business. Business Owners all across the country are joining “The Community of Small Business Owners? to receive and provide strategies, insight, tips, support and more on starting, managing, growing, and selling their businesses. As a member, you will have access to true Millionaire Business Owners who will provide strategies and tips from their real-life experiences. Tags: Break Even Point, Business Start Ups, Commercial Space, Escalation, Fiver, Insurance, Investing Business, Janitorial Services, Lease Term, Lessees, Maintenance, New Business Start Ups, Office Space, People, Property Owners, Real Estate, Residential Property, Square Foot, Squares, Ups « Previous Page — Next Page » eNews & Updates Sign up to receive breaking news as well as receive other site updates! Enter Google AdSense Code Here Work with Kenny Coach with Kenny Create Long Term Wealth Kenny Shrinks Recent Posts Business Management Case Study; Franchising Industry After 9/11 and Issues of Outlet Ownership Real Estate Investing: Income, Leverage, Appreciation And Depreciation Single Moms & Home Business Ownership: A Reality Or A Fantasy? 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